DORIS NEUBAUER TE ATARANGI SAYERS s AND MICHAEL JAMES TONER and EMILY JANE SARAH TONER trading as TONER LAW s JO-ANNE PAMELA AMREIN-PALAIRET JOHN HAMILTON PALAIRET Interested Party ANA LUCIA DIAS-VIEIRA GEORGE...
[2024] NZHC 2916
•8 October 2024
IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY
I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE
CIV-2023-470-000118 [2024] NZHC 2916
BETWEEN DORIS NEUBAUER
TE ATARANGI SAYERS
Applicants
AND
MICHAEL JAMES TONER and EMILY
JANE SARAH TONER trading as TONER LAW
Respondents
JO-ANNE PAMELA AMREIN-PALAIRET JOHN HAMILTON PALAIRET
First Interested Party
ANA LUCIA DIAS-VIEIRA GEORGE HAMILTON GALL
Second Interested Party
Hearing: On the papers Appearances:
P Napier and P Shanahan-Pinker for the Applicants M Robertson for the Respondents
M Keall for the First Interested Party
Judgment:
8 October 2024
JUDGMENT OF WALKER J [COSTS]
This judgment was delivered by me on 8 October 2024 at 1 pm Pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar
Solicitors:
P Napier, K3 Legal Ltd, Auckland
M Keall, Duncan King Law, Auckland
NEUBAUER & ANOR v TONER & ORS [2024] NZHC 2916 [8 October 2024]
Introduction
[1] The applicants, Doris Neubauer and Te Atarangi Sayers, sought an interim injunction requiring the respondents, Michael Toner and Emily Toner (t/a Toner Law), to disclose information relating to a property co-owned by Ms Neubauer, Mr Sayers, and the interested parties. On 9 July 2024, I issued a judgment ordering disclosure of some of the documents which were the subject of the application.1
[2] Following my judgment, the issue of costs remained unresolved. My preliminary indication to the parties was that it may be appropriate that costs lie where they fall given a measure of success by Ms Neubauer and Mr Sayers but also the first interested party, Jo-Anne Amrein-Palairet and John Palairet (the Palairets). Ms Neubauer and Mr Sayers do not accept that preliminary view and have, as they are entitled to do, filed a memorandum seeking costs against Toner Law and/or the Palairets. They seek that the incidence of costs should be borne primarily by Toner Law and that indemnity or increased costs are warranted.
Background
[3] To put that proposition in context, it is necessary to summarise the background. The underlying dispute is between Ms Neubauer and Mr Sayers, the Palairets, and the second interested party, Ana Dias-Vieira and George Gall, (together, the Collective). The Collective co-own a property on State Highway 29 (the Property) but have fallen out. The reasons for that and the resulting issues are being dealt with in parallel proceedings.2
[4] The Toners are principals of Toner Law; a law firm that acted for the Palairets and acted for the Collective on a limited scope and for a limited time.
[5] The present proceeding was in the form of an originating application seeking an interim injunction requiring Toner Law to disclose information. The originating application only named Toner Law and not the other parties to the Collective.
1 Neubauer v Toner [2024] NZHC 1870.
2 CIV-2024-470-24.
[6] Toner Law opposed the application on various grounds. The overarching opposition was that the application sought documents that were properly protected by legal professional privilege held by the Palairets which Toner Law was required to adhere to and protect.
[7] This Court permitted the application to proceed by originating application but required that it be served on both interested parties.3 That direction properly reflected the essence of the dispute since it was the Palairets’ interests which were primarily affected; and the Palairets were plainly required for the purposes of fully and fairly adjudicating on the issues.
Positions on costs
[8] Ms Neubauer and Mr Sayers maintain they were the successful party in this proceeding. They argue that they were held to be entitled to disclosure of information and documentation relating to the fund held in Toner Law’s trust account; and that this was their primary objective in making the application. Ms Neubauer and Mr Sayers contend that the judgment echoes their application though it sought disclosure of a broader category of documents than was ordered to be disclosed.
[9] Ms Neubauer and Mr Sayers argue for an award of 2B costs plus disbursements of $14,527.13. If costs are not awarded against Toner Law, they seek this amount from the Palairets.
[10] Ms Neubauer and Mr Sayers go further and maintain that they have an entitlement to indemnity or increased costs against Toner Law. They argue that Toner Law’s opposition was improper and that the Toner’s actions “in both the conduct of the work they undertook for the applicants and their subsequent refusal to provide the disclosure” constitute significant breaches of the Lawyers and Conveyancers Act (Lawyers Conduct and Client Care) Rules 2008 and the Lawyers and Conveyancers Act 2006.4
3 Neubauer v Toner HC Tauranga CIV-2023-470-118, 11 October 2023 at [6].
4 Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, rr 3.5, 6.1, 7,
7.1 and 7.6; and Lawyers and Conveyancers Act 2006, s 4.
[11] Toner Law’s position is that costs should lie where they fall — in line with my preliminary view.
[12] Toner Law emphasises that its opposition to the application for disclosure was consistent with its obligation to protect and maintain privilege on behalf of the Palairets. Toner Law emphasises that it withdrew its opposition after the Palairets were joined to the proceeding, as it no longer had an obligation to oppose the application. At that point Toner Law confirmed it would abide by the decision of the Court.
[13] Toner Law says it has provided all documents ordered to be disclosed by the Court, disputing Ms Neubauer and Mr Sayers’s contention that disclosure remains incomplete. I note that the issue of whether the orders have been properly and fully complied with is not properly before the Court on this costs issue and I put it to one side.
[14] Toner Law disputes that Ms Neubauer and Mr Sayers were the successful party and further disputes the necessity of the application because initial disclosure was provided shortly after Ms Neubauer and Mr Sayers’s first request. No further or specific requests were received by Toner Law prior to being served with the application on 13 September 2023.
[15] Toner Law points to further disclosure made by Ms Toner on behalf of Toner Law and the Palairets during the course of the proceedings. Toner Law maintains that: any additional disclosure required pursuant to the judgment was very limited; Ms Neubauer and Mr Sayers did not obtain the relief they sought in their application; and this Court upheld Toner Law’s position that their engagement on behalf of the Collective was limited in scope.
[16] The Palairets filed a comprehensive memorandum in opposition. They contend that the scope of the orders sought by Ms Neubauer and Mr Sayers was too broad and extended to legally privileged communications between them and Toner Law, including communications that occurred after the Collective’s relationship collapsed in early January 2022. The Palairets’ position is that the judgment largely upheld their point of view and the scope of disclosure ordered was modest relevant to
the broad orders sought. They also say that the small net volume of additional documents had marginal evidential value — seeking to rely on analysis by Mrs Palairet in the parallel proceedings. I put that submission to one side because it is unresolvable in the present context and irrelevant to the matter of costs.
[17] The Palairets also maintain that they were the successful party. They say that the very marginal success of Ms Neubauer and Mr Sayers should not be regarded as success for the purposes of costs orders. As a fallback the Palairets seek an award of 2B costs and disbursements of $8,953 in their favour.
Determination
[18] Costs are at the discretion of the Court.5 The overall objective is to achieve the outcome that best meets the interests of justice but naturally, the discretion is not unfettered. It is qualified by the applicable costs rules. The exercise of discretion must be consistent with established principles. One of the fundamental principles in respect of questions of costs is that the party who fails with respect to a proceeding should pay costs to the party who succeeds.6 There must be good cause to depart from this position.7
[19] Whether or not my preliminary indication should be revisited depends on a realistic appraisal of which party succeeded. This must focus on the result rather than each step along the way although the way in which the application proceeded also informs the question.8
[20] The schedule annexed to this judgment summarises the category of documents sought by Ms Neubauer and Mr Sayers, the positions adopted, and the orders made pursuant to the judgment.
[21] Informing the question of the relative success of the parties is the core aspect of the judgment.
5 High Court Rules 2016, r 14.1.
6 Rule 14.2(1)(a).
7 Shirley v Wairarapa District Health Board [2006] NZSC 63, [2006] 3 NZLR 523 at [19]; and
Wyllie and Firman [2024] NZCA 291.
8 Lawrence v Glynbrook 2001 Ltd [2015] NZHC 1005 at [8].
[22] Ms Neubauer and Mr Sayers’s contention that Toner Law was engaged to act on behalf of the members of the Collective on or around 23 October 2021 to complete the purchase of the Property and to advise on the legal arrangements between the members was found to be inconsistent with the evidence and documents.9
[23] Toner Law confirmed, prior to the application, that Ms Neubauer and Mr Sayers were fully entitled to a statement setting out how the funds they had paid into the trust account were accounted for. Toner Law provided a statement in respect of Ms Neubauer and Mr Sayers’s share of the funds received and paid,10 however Ms Neubauer and Mr Sayers sought more than that in their application.
[24] The gist of Ms Neubauer and Mr Sayers’s case that they were clients of Toner Law in respect of “property matters” and consequently entitled to disclosure of information as clients. The submission that Ms Neubauer and Mr Sayers were entitled to see all correspondence, communications or instructions given by the Palairets to Toner Law was rejected in favour of the Palairets’ contention that there was a limited joint engagement — limited both in time and scope.11
[25] I do not accept the submission advanced by Mr Napier that Ms Neubauer and Mr Sayers succeeded in obtaining the documents they were most interested in obtaining and that this is the measure of success. It was not clear that the primary intention of Ms Neubauer and Mr Sayers was to obtain information relating to details of the trust account that Toner Law held as stakeholder. While this may have been the case, the application was not approached this way — broader categories of documents were sought.
[26] Stepping back and looking at the matter afresh and holistically, I am not persuaded that the presumptive costs approach is engaged, let alone that increased or indemnity costs are justified. I also reject the fallback position of the Palairets that I should make a costs order in their favour.
9 At [16].
10 At [41].
11 At [58]–[60].
Result
[27] Having regard to the purpose of costs orders and the end result, I am satisfied that there should be no order for costs. Costs are to lie where they fall.
[28]Orders accordingly.
............................................................
Walker J
Schedule 1
| Originating application dated 1 September 2023 | Toner Law notice of opposition dated 7 November 2023 | Palairet notice of opposition dated 11 December 2023 | Orders made pursuant to judgment dated 9 July 2024 |
| (b)(i) All documents, deeds, correspondence, trust account records and all other information relating to the purchase of [the Property] … | Opposed. Have provided documents relevant to the purchase of the Property from the date that Toner Law was engaged by the Palairets until settlement. | Opposed. Documents have been provided as warranted by cost sharing of purchase of Property. | Not ordered. |
| (b)(ii) All documents, | Opposed. Have | Opposed. | Disclosure ordered of all |
| deeds, correspondence, trust account records and all other | provided documents relevant to the Collective’s | Documents within scope of disclosure requirements in | documents, deeds, correspondence, Trust Account records and all |
| information relating to the co-ownership arrangement between | engagement with the respondent including drafting of the Deed. | waiver provided. Have provided Toner | other information relating to the co‑ownership arrangements and |
| [the parties] … | Have provided respondent’s trust | Law’s trust ledger holding Collective funds on 11 October | settlement of the Property purchase created in the period between 8 December |
| ledger holding Collective funds (as independent | 2022, 25 July 2023 and 2 August 2023 as disclosure required | 2021 and 13 January 2022 including communications from and to the respondent | |
| stakeholder). | by Toner Law’s appointment as independent | for that duration. See [65]. In addition, all members of | |
| stakeholder for the Collective. | the Collective who paid funds into the Trust Account are entitled to | ||
| copies of Toner Law’s trust ledger recording the Collective’s funds. … | |||
| includes documents or instructions directing Toner Law to pay out any of the | |||
| retained funds. See [66]. | |||
| (b)(iii) All documents, deeds, correspondence, trust account records and all other information relating to the management and maintenance of the Property since 16 December 2021 … | Opposed. Have provided all documents relevant to the registration of the easement over the title of the Property post- settlement (by consent of other parties) | Opposed. | Not ordered save to extent the documents fall within categories above. |
| (b)(iv) All documents, | Opposed. Cannot | Opposed. | Not ordered. |
| deeds, correspondence, trust account records and all other | disclose confidential information between the Palairets and Toner | ||
| information relating to any disputes, issues or any actions whatsoever | Law subject to solicitor/client privilege without court | ||
| that relate to the Property. | order or consent of the Palairets. |
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